The money supply of a country has been growing for many years causing expected inflation of 8%
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The money supply of a country has been growing for many years causing expected inflation of 8% per year. The economy’s current GDP growth rate is 1%. The Central Bank’s estimate of long term GDP growth rate is 3%. The “real” interest rate, r, is 4%.
If the Central bank follows the Friedman rule policy, how fast should it grow the money supply?
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